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European and global debt crises
Key points
Key points
1) Reckless lending caused by liberalised financial system
Key points
1) Reckless lending caused by liberalised financial system
2) Bailout and austerity destroys lives and maintains the crisis
Key points
1) Reckless lending a root cause of crisis, caused by liberalised financial system
2) Bailout and austerity destroys lives and maintains the crisis
3) European campaigners for economic justice have to be working on the European debt crisis
Key points
1) Reckless lending caused by liberalised financial system
EU reckless lending
-20
-15
-10
-5
0
5
10
2000 2001 2002 2003 2004 2005 2006 2007
Year
Per
cen
t o
f G
DP Germany
Greece
Ireland
Portugal
Spain
Current account balance
Global reckless lending
-4.00
-3.00
-2.00
-1.00
0.00
1.00
2.00
3.00
4.0019
80
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
Per
cen
t o
f w
orl
d G
DP
Current accountsurpluses
Current accountdeficits
Global reckless lending
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
Per
cen
t o
f G
DP
Net lending to countries in the South (does not include illicit flows)
History of crises
0
10
20
30
40
50
60
70
80
1901-1920
1911-1920
1921-1930
1931-1940
1941-1950
1951-1960
1961-1970
1971-1980
1981-1990
1991-2004
Government defaults
Key points
1) Reckless lending caused by liberalised financial system
2) Bailout and austerity destroys lives and maintains the crisis
Bailouts and austerityBy start 2013, EU and IMF had lent Greece $290 billion – now accounts for 65% of foreign owed debt
0
50
100
150
200
250
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
Per
cen
t o
f G
DP
Bailouts and austerityExternal debt in the global South
05
1015202530354045
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
Year
Ext
ern
al d
ebt
as a
per
cen
t o
f G
DP
Human impactIn Greece, 11 per cent of population now live in extreme poverty; cannot afford a decent diet and enough heating
In Spain, Red Cross helped feed 1 million malnourished people in 2012
Impacts: In 1980s
Latin America
Population living in poverty increased from 144 million to 211 million
Africa
Population living in extreme poverty increased from 205 million to 330 million
Key points
1) Reckless lending a root cause of crisis, caused by liberalised financial system
2) Bailout and austerity destroys lives and maintains the crisis
3) European campaigners for economic justice have to be working on the European debt crisis
We have to work on Europe
European campaigners for economic justice have to be working on the European debt crisis:
• The impacts are huge
• We are irrelevant to our fellow citizens if we don’t
• The crisis, and response to it, are a central part of the financial system which has dominated the world for 40 years
Final point
Capital now rushing to the global South again, because of crisis in the North
- Some countries using capital controls, eg, Brazil
- Some taking opportunity to borrow, eg, Rwanda
